The government is unlikely to offer extra tax relief in the mid-year budget update due next month and will instead reserve any decision until the May budget.
The only extra stimulus likely to be contained in the mid-year economic and fiscal outlook (MYEFO) will be fast-tracked infrastructure projects that have been agreed to between Scott Morrison and the states.
Whilethe government is open-mindedtowards bringing forward the second stage of the income tax cuts, due to start on July 1, 2022, any such decision to do so would be left to the May budget.
Finance Minister Mathias Cormann insisted on Friday the economy was doing well relative to other nations and, assuming the September quarter growth figure to be released on December 4 was reasonable, there would be no need to turn MYEFO into a mini-budget.
He said the document would contain new spending measures for the crisis-riddled aged care sector and would account for the recent increases in drought aid.
Apart from the fast-tracked infrastructure projects, already flagged by Mr Morrison, that would be pretty much it.
“MYEFO is a half-yearly budget update, it is not a budget,” he told Sky News.
“There will be a range of areas where there will be increases in expenditure in relation to supporting communities impacted by the drought, investing in increased drought resilience as well as supporting families and communities impacted by the drought.
“There will be increased funding support in particular for the aged care sector. These are things that we have already publicly canvassed. Beyond that, it is an update.”
Speculation that the government might do more in MYEFO arose afterpoor job numbers on Thursdayshowed the first major monthly loss of jobs in more than three years. The unemployment rate edged up from 5.2 per cent to 5.3 per cent.
Senator Cormann said the government would not be spooked by a single monthly figure.
“I do not believe that you can jump to conclusions in relation to one month’s data,” he said.
“We will be looking forward to the third-quarter national accounts data to finalise our judgments in the lead up to the half-yearly budget update.”
Senator Cormann said the economy was doing a lot better than some others, meaning there was no need to rush forward stimulus.
“In the June quarter, Germany, the UK, South Korea, Singapore all had negative quarters of growth and the Australian economy continued to grow, despite all of the global economic headwinds, despite the impact of global trade tensions on the global economic growth outlook,” he said.
“We have had several downgrades in the global economic growth outlook which has a direct impact on our domestic growth outlook here in Australia, because we are an open trading economy.
“Yet our economy continues to grow where other economies are shrinking.”